Tariffs and Recession
So...I have to ask..was this the outcome Trumpers were hoping for? If so, congratulations I guess? Although, I'm not really sure how tariffs and now the real possibility of a recession, since Trump will not rule it out, make America great again. I know many on here are great fan fiction writers, so could you please use your incredibly imaginative and fictitious writing ability to trick not only me, but also yourselves into believing that this is great for America?
You know what's actually the most ironic part of all this? It's that Trumpers and red states are the ones who are most affected by tariffs and recession lol. The poorest states in the US are red states. These states will feel the most pain from tariffs due to inflation and then will also feel the most pain from a recession hahaha.
You know what would be even more hilarious than the red states taking the brunt of it? When a recession hits and the wall street financiers who all voted for Trump get laid off and still have to pay $10 for a carton of eggs hahahaha.
But I have to thank all the Trumpers actually. Because the only reason I can think of that makes any of this make sense is that Trump wants a recession for him and his buddies so that they can scoop assets up for cheap when the dust settles. Howard Lutnick recently made both his useless sons to high ranking positions in Cantor. The only way this move makes sense is so that he can feed insider information to the only two people he can trust to never out him, so that they can then use this information to help Cantor prosper. I can only imagine how much inside info is being shared at their Sunday dinner. Luckily for me, I am well capitalized to scoop up the cheap assets during the upcoming recession. So from the bottom of my heart, thank you Trumpers and I hope for those Trumpers who are well capitalized that you may also prosper during this recession. And for those Trumpers who aren't well capitalized, well, sucks to suck. I hope you don't get laid off (actually I hope you do, cause that's kind of the point of the recession and necessary collateral damage (although I guess you're not really collateral damage since you voted for this right?) for me to pick things up for cheap.)
Most of them will pretend to not see this post or provide a convoluted, nonsensical defense while quietly wondering like the rest of us “what the fuck is this asshole doing?”
My favorite will be when I’m told this isn’t what they voted for as we watch M&A and IPO activity get pushed back to 2026 at the earliest
WSO will demote (censor) this thread as they always do with any thread that criticizes Trump
In all fairness to them, they demote all political topics.
Let's start with the EU
From the latest March 2024 National Trade Estimate Report from the Office of the USTR (https://ustr.gov/sites/default/files/2024%20NTE%20Report.pdf).
In case this is too hard to figure out, March 2024 was over three years into the Biden administration:
First the direct tariffs...
"Although the EU’s tariffs are generally low for non-agricultural goods, some EU tariffs are high, such as rates of up to 26 percent for fish and seafood, 22 percent for trucks, 14 percent for bicycles, 10 percent for passenger vehicles, 12 percent for processed wood products, and 6.5 percent for fertilizers and plastics"
Now for regulatory barriers ("But it's not a direct tariff" the midwit cries out)...
Other USTR-named barriers included certain EU regulatory processes, which the agency claimed lacked sufficient transparency and opportunity for stakeholder input. Additionally named are concerns about lack of clarity and feasibility of compliance with certain EU rules, such as requirements for firms to conduct due diligence to address adverse environmental and social impacts of their supply chains. A planned carbon border adjustment mechanism, which is to impose a fee on carbon-intensive imports (e.g., steel, aluminum, cement, fertilizer) by 2026, has also faced criticism (but this is only a "fee", not a tariff right?). U.S. tech argues that EU digital competition rules unfairly target large U.S. technology firms. Trump also has criticized various fines levied by the EU on U.S. technology firms, characterizing them as a “form of taxation,” and citing, as examples, Google and Apple; the former faced an anti-trust penalty and the latter, a penalty for unauthorized tax breaks.
A ton of stuff in here related to pharma, which the Congressional Research Office and Bureau of Economic Analysis has noted is one of the top, if not the top, U.S. export to the EU. And the callouts go country-by-country if you really want to dig in. "BUT IT"S NOT A DIRECT TARIFF!" the midwit screams again.
"U.S. pharmaceutical stakeholders have expressed concerns about several EU Member State policies affecting market access for pharmaceutical products, including non-transparent procedures and a lack of meaningful stakeholder input into policies related to pricing and reimbursement. These policies have been identified in several Member States as described below. Stakeholders have also expressed concerns over inconsistent and lengthy time periods for pricing and reimbursement decisions. U.S. industry stakeholders FOREIGN TRADE BARRIERS | 155 have grown increasingly concerned about policies that are being formulated with little opportunity for engagement."
To spell the above out for the thickheaded amongst us, if you don't play by EU member state rules and give these first world countries a 40-90% discount vs. the U.S. market price (yes, read that again, 40-90%!) they simply say "Ummm, sorry Uncle Sam domiciled C-corp, you don't get any access at all to our market." And this is after they've delayed entry of the drug by anywhere from 12-24 months vs. the U.S. (we all understand NPV right?). It's extortion and certainly not the FREE MARKET, but hey, at least it's not a tariff, right?
How about we move to illegal subsidies for their airline manufacturing industry (again, not a direct tariff so let's just ignore)...
"In October 2019, after 15 years of litigation, the WTO authorized the United States to take $7.5 billion in trade countermeasures in the dispute against the EU, France, Germany, Spain, and the United Kingdom regarding their illegal subsidies for the Airbus consortium. "
Should I keep going? Need me to talk about their insane climate initiatives listed in the report that simply end up being another tax (but not a tariff!) on U.S. business, even those with minimal carbon footprint? This is all obviously interconnected and none of it is "MUH FREE TRADE" that the Europoors would have you believe.
And now for Canada
Again, from the latest March 2024 National Trade Estimate Report from the Office of the USTR, issued under the Biden admin (https://ustr.gov/sites/default/files/2024%20NTE%20Report.pdf).
While the USMCA was indeed an agreement between our neighboring countries, Canada has clearly been gaming the system and not playing fair when it comes to agriculture. In totality less egregious than the EU, and admittedly Trump is probably picking on our little brother nation a bit because he doesn't like Trudeau, but let's remember, these disputes and settlements were under the Biden admin, so easy now with the TDS:
"On May 25, 2021, the United States requested and established a dispute settlement panel under the USMCA to review Canada’s dairy TRQ allocation measures that undermined the value of the TRQs by setting aside and reserving access to in-quota quantities exclusively for processors.
The final panel report was released to the public on January 4, 2022. The panel agreed with the United States that Canada’s allocation of dairy TRQs—specifically the set-aside of a percentage of each dairy TRQ exclusively for Canadian processors— is inconsistent with Canada’s commitment in Article 3.A.2.11(b) of the USMCA not to “limit access to an allocation to processors.” Canada made changes to its dairy TRQ allocation measures following the release of the panel report, but the United States rejected those changes as a basis to resolve the dispute. On May 25, 2022, the United States—for the second time—requested dispute settlement consultations with Canada under the USMCA to address Canadian allocation measures that impose new conditions on the allocation and use of the TRQs and prohibit eligible applicants, including retailers, food service operators, and other types of importers, from accessing TRQ allocations. On December 20, 2022, the United States requested new dispute settlement consultations, expanding its challenge of Canada’s dairy TRQ allocation measures to include Canada’s use of a market-share approach for determining TRQ allocations, which applies different criteria for different segments of applicants, and Canada’s failure to allow importers the opportunity to fully utilize TRQ quantities. On January 31, 2023, the United States requested and established a second dispute"
2. Now for milk...
"Canada establishes discounted prices for milk components provided to domestic manufacturers of dairy products used in processed food products under the Special Milk Class Permit Program (SMCPP). These prices are “discounted,” as they are lower than regular Canadian milk class prices for manufacturers of dairy products and pegged to U.S. prices or world prices. The SMCPP is designed to help Canadian manufacturers of processed food products compete against processed food imported into Canada and in foreign markets."
3. How about wine, beer and spirits...
"Most Canadian provinces restrict the sale of wine, beer, and spirits through province-run liquor control boards, which are the sole authorized sellers of wine, beer, and spirits in those provinces. Market access barriers imposed by the provincial liquor control boards greatly hamper exports of U.S. wine, beer, and spirits to Canada. These barriers include cost-of-service mark-ups, restrictions on listings (products that the liquor board will carry), reference prices (either the maximum prices the liquor board is willing to pay or the prices below which imported products may not be sold), label requirements, discounting policies (requirements that suppliers must offer rebates or reduce their prices to meet sales targets), and distribution policies."
4. How about digital trade...
"On August 4, 2023, the Canadian Government published its latest draft legislation for a digital services tax (DST). Canada’s proposed DST could be imposed any time after January 1, 2024, and could be retroactive to January 1, 2022. Canada has taken this step, despite joining the October 8, 2021 OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy, which called for all Parties to commit not to introduce DSTs in the future"
5. Online streaming, which predominantly comes from U.S. domiciled companies (Canada is so pathetic, literally begging for subsidies so they can have home grown Netflix shows about curling)...
"The Canadian Government passed the Online Streaming Act on April 27, 2023, and has instructed the CRTC to create a new methodology for financial contributions and obligations on streaming platforms to support and promote Canadian programming, as well as review how it defines Canadian programs. The United States will closely monitor the implementation of the Act and any USCMA implications."
6. Let's get to pharma...
Canada has a national health system, and similar to the EU utilizes reference pricing for RoW developed and manufactured innovative pharmaceuticals, the majority of which come from the U.S. Despite also being a first world nation with a comparable standard of living as the U.S., Canada inexplicably free rides on American innovation and receives innovative pharma product discounts anywhere between 25-90% of the U.S. price. But hey, this makes sense because, FREE TRADE and HOCKEY or something.
There's a lot to unpack here - I am more familiar with the Canadian trade relationship so will focus on that but will make comments on the EU in passing.
I think you have made a few accurate observations but broadly have come to an inaccurate conclusion. Your argument is "Here's my list of trade grievances with each country, this is evidence of an unfair trade relationship" but you did not really address OP's core topic of whether the Trump administration's tariffs and volatile trade policy is the solution to these trade grievances.
~1% (4 pages) of the document you listed talks about the Canada trade relationship and I'll discuss your points individually
Agriculture (really just Dairy)
The quotas and tariffs referenced in the document actually apply to both nations (not just for US imports into Canada) and were agreed to by the previous administration 5 years ago - the concern is that Canada has a supply management system which in theory provides domestic producers a price advantage. However, in practice, Canada is the 2nd largest export market ($1B) for US dairy while Canada only exports $300M to the US. Regardless - if this is one of the top 5 MAJOR grievances for an $800B a year trade relationship, I'm confused about the rhetoric
Alcohol
Canadian alcohol is mostly sold through government owned channels under a consignment model. I'd love it if they opened up that market for us but It's really not that big of a trade issue. The barriers referenced in the document in theory sound challenging but in practice, Canada is the 2nd largest export market for the US beverage industry, importing ~2x the per capita as much as its exporting to us
DST
Agree with you that this should not exist and is discriminatory to the US in practice because most digital companies are based here. Regardless, I actually believe a DST should be applied by the US on our tech companies because currently, they evade taxes by moving the IP and routing all digital profit to low tax jurisdiction (Ireland). Canada and France currently have a DST and each collect ~$500M a year from US digital companies
Online Streaming
This law is not in effect, $0 of taxes have been collected and is widely considered to not come into effect due to domestic disapproval
Pharma
While I don't disagree that the US shoulders a disproportionate amount of the global drug R&D budget, I don't think trade relationships is the primary reason why. Differences in US pharma prices have more to do 1) price negotiations, 2) patent regulation and 3) drug producer to patient value chain
Price Negotiations
Virtually every single high income country has a single payor drug system that negotiates directly with drug companies to get optimal prices. It was illegal to negotiate drug prices in the US until Biden's 2022 Inflation Reduction Act allowed Medicare to negotiate pricing for certain drugs
Furthermore, our healthcare system is multi-payor which makes it more challenging to push for pricing discounts relative to a single payor system
This system is "bad" for the US because it forces us to shoulder a greater % of the world's drug R&D burden (certain drugs would not be developed if the US didn't have a pure play free market drug pricing model because the ROI math would not work for the developer). However, it is "good" because it ensures (1) the US remains the world's top innovation economy (2) our companies get rich off aforementioned innovation and we create science/research heavy jobs for our graduates. Our governments can make the conscious decision to shift to the same pricing models as the countries you complained about. This would solve the issue of us shouldering a disproportionate R&D burden at the cost of reduced global drug innovation
Patent Regulation
The US has among the best patent protection and market exclusivity benefits for drug companies in the world. Consequently, cheaper biosimilars/generics are available in other markets years in advance of them becoming available in the US. Furthermore, US drug companies engage in evergreening their patents by making small modifications to the drug and in "pay for delay" where they pay generic manufacturers to delay launching competitive products, allowing them to maintain higher prices for longer. These practices are generally regulated against in most other markets
Value Chain
The distribution of drugs in the US are controlled by pharmacy benefit managers and doctors. PBMs negotiate rebates based on the drug's list price while doctors are compensated based on a % of the drug value prescribed. Consequently, there is little financial motivation for PBMs/doctors to push for cheaper generics/biosimilars. Furthermore, the US drug industry spends $10-20B a year in advertising. Again, other countries generally regulate against these activities
Summary
Your argument is 1) not convincing that there is a meaningfully unbalanced trade relationship 2) glossed over how the minor trade imbalances constitute large scale complaints in the media that make our country look irrational and dumb (3) how the Trump administration's volatile tariff policy is the right approach to correcting some of the genuine trade grievances, no matter how small they might be
I have to say that you seem to have taken an ideologically driven perspective rather than a fact based practical view. These "unfair" trade/foreign policy relationships are one of the reasons why the US has been the undisputed global superpower for decades. I would prefer it to stay that way but I think Trump's policies are undoing the work required to maintain it. My concern is that the administration is staffed with ideologues and spineless A-Kissers who are always auditioning for Trump's approval - this is a dangerous way to run an organization
Trumps approach to almost everything is terrible. I don't believe that he is some 4D chess player and trying to tank the market intentionally. He just has no idea no what he is doing.
In his first term all he cared about was the economy so that he could get re-elected. This time since he can't get re-elected, he just does not give a fuck lol
His approach to almost every policy is bad, including his approach to DEI, which people applaud on this site. The war on DEI and trans people is not uplifting at all. It probably has a negative impact on consumer confidence
These people are not interested in genuine discourse.
Tariffs are bad, okay.
Agreed that trump supporters are not interested in genuine discourse, but I believe the main reason for that is that they are intellectually incapable of having genuine discourse.
Trump is way too pro-Israel and tarriff-happy for my liking.
Both are Un-American.
Did you complain about Canada’s 250% tariffs on U.S. dairy and agriculture? How about the EU’s tariffs on literally everything American?
It’s amazing that you people want to continue seeing America take it up the ass all so you can consoooooom more. At least be consistent.
Wasn't it 250% tariffs if US dairy and agriculture hit a specific quota? One that the US has never been close to? Also, who negotiated that trade deal that created that trade balance with Canada? Wasn't it Trump, after dismantling NAFTA?
How is pro-Israel un-American? US has the largest population of Jews in the world. And you think supporting Muslims against Jews would be more American? Muslim culture is literally the opposite of American.
Tarriffs are supposed to stimulate local production of goods, so it's also pro-American, but probably less profitable than outsourcing, thus the market is tanking.
It is not Un-American to be pro-Israel and to suggest it is, is dumb as fuck. Israel is an ally of the US. You replied to a guy who probably has 10 accounts.
So much anger from a "non-trump supporter." Perhaps you are angry that the president you voted for is screwing you over lol, but admitting that would be embarrassing so you default to flawed logic as a means of saving face.
Do you know what the point of globalization is or even what globalization is? The reason Honda is producing the next generation in Indiana is due to the tariffs because now it is cheaper to produce it in Indiana than in Mexico. However, the cost of labor didn't drop to Mexico's cost of labor. Do you know what this means for the consumer that buys Civics? My whole post is literally about how inflation hurts this country and your rebuttal is to provide an example of how Civics will go up in price? How the fuck does that refute anything I said, you moron. Sure, Honda will create a couple thousand jobs here, but at what expense and at who's expense? All this is is a tax on the rest of the country to subsidize an industry that's been declining in the US for decades. All sane and honest economists disagree with the tariffs, but here's Deal Team Six (not an economist) to tell them that they are wrong lol. Tariffs makes everything more expensive for everyone. When they say "tariffs will bring jobs back" the translation is "the rest of the country will pay higher taxes to subsidize flailing industries."
There's a reason I am a CEO in PE and you are a lowly Associate. Your lack of understanding of economics 101 and what tariffs are is one of the many reasons.
C'mon man. The idea that lots of jobs are going to come back to the US is absurd. Companies are not going to pay US wages when they can pay people in emerging markets 1/10 of what they pay in the US. Sure, you might get a company doing a one off move into the US but this is likely going to be trivial.
If US companies do bring jobs back to the US and pay US wages, that means prices would rise substantially
How many times have you taken Canada or the EU to task for their absurd tariffs on American products? Oh right, never. Please try to keep up and be consistent
well, at a certain tariff rate paying American wages would be cheaper than paying tariffs
There's no way you're this retarded
Expensive way to make jobs
well, it's also expensive to pay social support to unemployed. it's probably better to spend money on building something than on handouts.
Because it's time for the decennial free market pump and dump. If stock market return is predicated on buy low, sell high, then this manufactured chaos creates the perfect opportunity for a little buying opportunity. Price fluctuation creates more buying/selling opportunities. (Un)fortunately in my line of work I interact with some large family funds. The general consensus is they want volatility. Please enjoy the economic rollercoaster curtesy of our ruling class. Remember kids, every time the economy dumps, there's a chance that it won't pump again.
A few observations:
So no, I don't think Trump screwing around with some tariff game is the cause of any recession that may come. At worst, he's ripping the band-aid off to expose deep wounds that willfully blind people didn't anticipate.
These people would happily walk America off a cliff if the S&P 500 would rise 50bps
Exactly, I’m so sick of it
Hahaha Dr. Rahma Dikhinmahas, the doctor of Trumponomics mental gymnastics, strikes again! This man is capable of defending any decision - good or bad - it doesn't matter to him! You are the fan fiction that I was looking for.
1.) With that flawless logic then no decision made by any administration or legislator will ever matter! Roe vs Wade? Who cares! Just implement it today then dismantle it tomorrow! Medicare/medicaid? What does it matter?? One day you have health insurance, the next day you don't! That's what's so great about America! You will never know the next move! No one's lives are ever affected by legislation because you can just re-instate or repeal it! All you need is to get enough votes from congress and voila! Everyone's problems are solved! The issue with tariffs and bad decisions in general made by the president is not the speed nor flexibility to repeal or pass legislation. The issue is that the legislation affects millions of people's lives. Did you forget that part?
2.) Yes I agree...but this has nothing to do with tariffs. I mean to take things to extreme lets drop a nuke on Russia. That will also lead to a deflationary economy, but that doesn't mean it's a good idea in the same way that tariffs are not a good idea.
3.) This is has nothing to do with anything. As a matter of fact, none of your statements have anything to do with anything. You don't even try to defend nor justify the tariffs. Your entire argument is "well we needed a recession, so tariffs." The fuck? You provide no explanation as to why America's need for a recession or eventual arrival at a recession justifies tariffs. You're just saying words with no meaning.
In his first term Trump pressured Powell and the Fed to cut interest rates when rate increases was what was needed. Guess what happened to inflation starting 2021/2022? Your lord and savior, Donald Trump, has absolutely 0 understanding of basic economics. Your continued and undying support for him is a good indicator that you also have 0 understanding of basic economics.
These are your observations? Pathetic.
TL DR sorry
What "deep wounds" exist that people have been willfully blind too? Manufacturing jobs aren't coming back because manufacturing jobs weren't lost to other people but rather to machines—we produce as much steel in the US today as we did on average in the 1950s.
Manufacturing got smarter and more efficient, and, unless we want to go full luddite, no amount of tariffs can turn back the tide.
What the MAGA people don't get is also how far behind we are in manufacturing. Yes, cost is part of it. A big part of it... but also expertise. The world's best ship-building expertise is all in Asia. It's in China. It's in Japan. Outside of Asia, it's in the Netherlands.
People have a misconception it's just because of cost. It's not.
Tariff all you want, it's not going to do anything (except rise the cost of goods for consumers).
We were building a house of cards with deficit spending and cheap money creating bullshit jobs and even entire bullshit industries. And regulations on top of regulations passed, hamstringing our productivity bc the left and the moderates think we’re just so damn rich we can afford to compete with the world while also covering every little regulatory goal from green to whatever. Open borders because we don’t just want the productive and smart immigrants, let’s take them all. We can afford to house and care for all them amirite? We even had a class of academics (MMT folks) telling us money isn’t real anymore.
Turns out we can’t afford all that bullshit, deficits need to be addressed and people need to actually do productive things for a living. So we get a president who believes in the most basic principles of economics and starts dismantling the bullshit, and he gets blamed for the recession? Haha yeah ok.
Everyday people are smarter than all you elitist lefties think. That’s why they know when a goofy real estate mogul / reality TV star, or tech billionaire, is on their side, even if his life is nothing like theirs. It’s why you guys got smacked in November and still don’t get it even afterward.
Yeah nobody was talking about that.
50% of what you wrote is totally irrelevant to the topic. There are two issues with implementing or repealing a tariff quickly. First, you give the appearance of being incompetent. Second, companies would like to have some certainty about the rules by which they have to play.
The stock market (and most economists) are telling you that tariffs are not good for the economy. Tariffs are inflationary. If inflation rises, the Fed would raise rates and we know what will follow.
Fair. Especially your first point. I don’t love that the guy looks haphazard in everything he does. And I don’t think he’s playing 4D chess. But I do think he understands the overlooked concept that reversible decisions should be made quickly. On your 2nd point, sure tariffs are inflationary in a vacuum but then you have deflationary forces like AI and the unwinding of our debt bubble economy so I’m less confident we wind up in net inflationary times.
The stock market reacts in microseconds these days with a majority of current volume based on HFT. It provides absolutely zero insight into longer-term economic implications and to think otherwise is ignorant. The market and the economy are not one in the same, and if the market had an accurate picture of things a decade out then volatility would cease to be a thing.
This 100%. Anyone paying attention should know or be able to see that America's economy (and its management) has been spiraling for some time. Each administration's duty has been in part to keep kicking the can down the road. Something that can't last forever won't last forever, and the consequences of our (America, the West, related parties) actions have to eventually be reckoned with.
My favorite is the Trumpers who say "it's just part of the normal business cycle." Weird how within 1 month, we've gone from talk about a soft landing to an imminent recession. Almost uncanny the correlation with the introduction, withdrawal, introduction, withdrawal of tariffs.
Same thing with Ukraine. Intelligence sharing pause one day, resumption the next. Meanwhile, the Russian drone attacks keep happening on Ukraine cities... Trump is playing with people's lives, and MAGA funs are still thinking about "owning the liberals." SAD.
Same thing with USaid. Still shut down, but at least the Supreme Court voted to pay contractors who have already fulfilled services and delivered goods to USaid. For services already delivered... the fact that that had to reach the Supreme Court is ridiculous.
Who cares? I 100% expected shorter-term pain for a longer-term restructuring of our relationship with the welfare queens that are the rest of the world. I have multiple 7-figures invested in the market…but I don’t invest on a weekly cycle, more like a 10 year horizon.
For the naysayers, what exactly is the plan longer term then? Keep kicking the can down the road, let every other nation in the world, including our “partners”, continue to tariff us and charge us in order to protect their own pet industries? I understand a lot of people like to start whining and screaming orange man bad, but no one addresses the fact that so many of these nations, including Canada and the broader EU, put insane tariffs on a wide variety of American products in the interest of their own nations and peoples.
I’m so sick of this Propositional Nation idea where everyone else thinks America is this big grab bag of $$$ to take advantage of. Keeping up with the status quo of the last 30 years is only a band-aid, and it has to stop, albeit some pain along the way. And we wonder why nothing transformational can get done in this country anymore, since it’s all finger wagging and spewing HOT TAKES like a bunch of menopausal women
Ah yes, of course, short term pain! Short term pain for long term gain...
Notice how the mouth-breather didn’t answer a single serious question I put forward. Impossible to take these people seriously when they start melting down all because the S&P500 drops a bit.
How stupid do you feel now? Or will your TDS just keep spewing?
I, for one, completely agree with this take! Albeit a little bit different from your view but similar. I am so sick of how high prices (mainly for investment assets) have been. Real estate, stocks, bonds, Bitcoin, EVERYTHING! It needs to come down. We need a recession so that I can scoop things up at a discount! As for the blue collar Trumper in Michigan who can't afford electricity anymore well... his loss is my gain i guess.
I hope you’ve already secured your junior year internship and your technicals are rock solid to be trolling this much on WSO. But kudos!
Meanwhile Elon has Trump on the White House lawn selling Teslas like a Girl Scout. This is not a serious person.
I mean Basel III being implemented, continued heinous anti-trust enforcement, slowdown in nonresidential private investment from the expiring TCJA provisions, growing reliance on government spending to meet GDP targets, and overall a continued over-regulated banking sector… These things in addition to actual political preferences can easily drive someone to vote for Trump. I mean you got various Trump cabinet members that are Wall Street veterans occupying Commerce, Treasury, FTC, and various other areas of the administration.
Especially “junior bankers” that you seem to be targeting—a lot of them had to go through hell in a horrible financial services job market that many attribute at least partly to poor fiscal policy by the previous administration. And I think a lot of those same people don’t regret voting the way they did because they didn’t want a president whose biggest accomplishment was finishing solitaire in under 20 minutes as VP.
But honestly, things like Basel III being implemented or Lina Khan going after mergers that probably would have benefited everyone including consumers, are reasons alone for someone to have voted against the incumbent party. So I really don’t understand the snobbish judgement.
I agree with your sentiment for the most part but wasn’t it a bit necessary to regulate the banks? Reg cuts by Clinton and overall loose regulation was a big player in the Great Recession.
Well, our government tends to overcorrect when it comes to regulation after a disaster. The Great Recession was largely caused and prolonged by the Fed being distracted by inflation targets that they ignored contractionary indicators, especially those that showed liquidity dryup. The financial crisis that triggered the recession was, of course, a byproduct of poor regulatory oversight over the banking sector when it came to subprime mortgages and asset-backed product packaging. But again, policymakers knew the exploiting of the Clinton-era housing policies occurring on Wall Street, and ignored it since equity metrics for disenfranchised groups were improving.
But again, there's a general consensus for people who cover financial services that we overregulated after the Great Recession, and have continued to restrict lending even as the "too big to fail" banks continue to show they can handle worst-case scenario liquidity crises.
Is your argument that because we have regulations that resulted after historic recessions/depressions that tariffs are now justified? Should we have a WWIII because there was a WWII and WWI? I'm not understanding the connection you are making.
Or is the point you are trying to make that because more regulation was passed after '08 and that the financial services industry has been weaker since, then many finance professionals are more inclined to vote for Trump? I mean...everyone has their own reasons for who they vote for. Whether or not those are good reasons or not and whether or not those reasons are best for the country rather than the individual is a different story. With the new set of tariffs and increased risk of recession (or worse if we actually do enter a recession), how do you think that will impact the financial services industry and job market?
Trump has been threatening tariffs since day 1. In light of this information, many on wall street continued to vote for him, which means they believe that the incumbent party would have left us worse off than tariffs...yet for some odd reason the finance wizards of wall street seem to only be realizing the effects of tariffs now. Shouldn't markets be rallying due to tariffs? I mean, once again, Trumps been touting them for 2 campaigns now and has implemented them both times. Markets should be celebrating that we have tariffs instead of democrats in office. Or could it be that MAGAs on wall street did a stupid?
My point for the banking sector is that banks have external trends pushing them to consolidate, similar to Europe. A significant part of it had to do with regulations in the US that made it very challenging for small banks to have competitive rates, maintain the ridiculously high capital requirements, and actually have positive returns. And as most larger banks start relying more on corporate fees rather than commercial interest fees, that makes it a really tough environment for banks. And I'm indifferent to this consolidation trend, but the previous administration wanted stricter regulations on the banking sector (following in the footsteps of Europe) but also would target bank mergers by their anti-trust division, which was frankly retarded. Like if we are going to regulate the shit out of your neighborhood bank, and then when they try to strategically merge with another regional bank or get acquired by a larger entity, we decide to block it because it's "anti-competitive" and "not in the consumer's interest." You know what else isn't in the consumer's interest: liquidity crises.
As to your point on tariffs, if someone on Wall Street who voted for Trump is surprised that tariffs are one of the only actions the President can take that directly influence prices and indirectly affect tax policy, then they are severely misinformed. But, I think it's also fair to assume a few things: 1) Trump, in his first term, was stopped from making a lot of disastrous decisions by his cabinet members. 2) Trump likes leverage, and he's willing to take horrible stances on trade and foreign policy to create the agent of chaos persona, which can be effective in international relations because we all like to assume that players act rationally. 3) Trump is being slimey and doing this solely to make the case for subsidies for American farmer special interest groups that donated significantly to his campaign.
But anyways, my main point has been the Biden administration really fucked up a lot of prospects in financial services and ones that were currently working with contradictory guidance and regulation, reckless fiscal policy, and growing reliance on the public sector for positive economic data to satisfy investors.
Also, it's too early to actually tell the actual damage Trump's tariffs and vision will have on financial services and the overall economy abroad. But my point stands: Informed people in finance shouldn't feel dumb or regretful (yet) for voting for Trump because the alternative didn't seem much better (and honestly for me seemed much worse)
You have a myopic view of the world
I disagree that tariffs are suitable for the U.S. economy. At the same time, I don't think any other bad economic policies are on the trump agenda. Still, looking at the Kamala's agenda, almost everything there is just terrible. She wants to tax the rich, which is the same tax as the tariff, which results in higher consumer prices. She wanted to introduce the capital gains tax, which would cause a massive selloff and crush the stock market. She also wanted to subsidize housing, which would just increase the prices of housing. I can continue forever. Besides the tariffs that are, again, bad, two good policies for the U.S. economy are government decentralization and tax cuts.
Voted for Trump. Most of what he’s doing now makes that decision look pretty ridiculous but still think it was the right one. A lot can change in 4 years. Hope I’m right but you seem to be the only one rooting for a shittier tomorrow
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